Jobless claims fall to 369,000

10.26.2012

The U.S. Department of Labor announced on October 25 that weekly applications for U.S. unemployment fell to 369,000, a level that staffing experts say is reflective of a modest hiring environment.

According to The Associated Press, applications for unemployment dropped by 23,000 this week, from 392,000 the previous week. This week's claims figure reportedly stabilized compared to the previous two weeks, when intense seasonal hiring led to volatile numbers. The number of jobless claims is a strong indicator of layoffs, and when claims fall below 375,00, it typically means employers are hiring enough people to lower the unemployment rate.

The number of people applying for unemployment benefits has been unsteady since January, rising and falling between 360,000 and 390,000 regularly. However, employers have been adding an average of 150,000 jobs per month - just enough to lower the unemployment rate. So far in 2012, the jobless rate has fallen from 8.3 percent to 7.8 percent.

Robert Kavcic, a BMO Capital Markets economist, said that it would be favorable for jobless claims to drop below 360,000 in 2012 - something they have struggled to do.

"That barrier could be a good level to watch for an indication that the U.S. labor market is kicking into a higher gear, but we're just not seeing it yet," he said to clients in a note.

But despite the stronger numbers, employers still may be reluctant to bring on full-time workers until the conditions improve even more. The ongoing crisis in Europe is further eroding employer's confidence in bringing on new workers, while others are still keeping a watchful eye on tax increases and government spending cuts that would go into effect in 2013 if Congress fails to strike a deal over the budget.

The latest data available show the number of people who applied for unemployment as of October 6 fell to 4.9 million, about 85,000 fewer people than the week earlier. Other signs are emerging that the economy is on the upswing, such as improved retail sales, better home and residential construction figures and low mortgage rates.

The impending "fiscal cliff" could be the most worrisome event for employers, according to CBS News, with some experts estimating it could cost as many as six million jobs through 2014.

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